As a dealership marketer, it can be hard to keep up with the barrage of acronyms thrown your way. It’s not uncommon to hear an alphabet soup of a sentence like: “Let’s A/B test CTAs to reduce CPC so we can raise ROI for our OEM.”
If you feel like you need a translator, you’re not alone. I can’t explain every dealership marketing acronym in this post without giving myself severe carpal tunnel. So, today, I’ll start with one of the most important ones: CPL, which stands for cost per lead. In this blog, I’ll explain what CPL is, how to calculate it, why it’s important for dealerships, how you can reduce it, and more.
Cost per lead (CPL) is the amount of money it takes to generate a new prospective customer for your sales team from your marketing campaigns. A lower CPL is considered ideal — it means your marketing campaigns are efficiently driving leads. If your CPL is significantly higher than other businesses in your industry, it might be time to reevaluate how you’re spending your marketing dollars.
Cost per lead (CPL) is the measure of how much money it takes to generate new prospects — however, not all prospects will progress through the funnel and convert. Cost per acquisition (CPA), by contrast, is the amount you have to spend to generate new customers who ultimately buy a car. CPA can be a good metric to track alongside CPL, so you can see how efficiently you’re converting your leads to revenue.
Cost per click (CPC), on the other hand, is a metric used only in paid search and display ads. To calculate cost per click, simply divide your ad spend by the number of clicks the campaign received. Of course, not all clicks result in leads, so your cost per click will often be lower than your cost per lead. Tracking CPC can help you understand how well your campaigns are driving top-of-funnel engagement.
When you regularly track your CPL, you can better determine how to allocate your budget across your different marketing channels. For example, if cost per lead is significantly higher from Facebook Ads than Google Ads, the team could allocate more of its marketing dollars to Google to increase efficiency.
The formula for cost per lead is simple:
Cost per lead = (Total ad spend / Total attributed leads)
For example, if you acquired 50 leads through a Google Ads campaign that cost $1000, the CPL for that campaign would be $20.
Rather than using a single cost per lead figure across all of your marketing efforts, you should calculate cost per lead for each campaign, so you can understand which are the most effective. This will allow you to use your marketing budget more effectively and drive leads at the lowest possible cost.
The average cost for an auto dealership lead hovers around $250. This is higher than most industries, since buying a car is a complex decision — the average customer researches their purchase for months before actually visiting a dealership. During this time, it often takes numerous marketing touches and engagements to finally convert them to a lead.
According to expert projections, digital ad spending in the automotive industry is poised to increase by 11.7% in 2023. As your competitors pour more money into ads, it will become harder to cut through the noise. To keep your cost per lead low in this competitive landscape, you need to ensure you have a strong attribution and optimization strategy.
Now you know how to measure your cost per lead, but that’s just the start. It’s time to reduce your cost per lead so you can get more out of your marketing budget — keep reading to learn our top tips.
Most automotive marketers use clicks to optimize their media spend and inform their bidding strategies. But online conversions only tell part of the story, since 67% of automotive customers will call at some point during their buying journey. When customers call, they frequently schedule test drives and set up repair appointments, which are both valuable conversions for your dealership. If you don’t count call conversions, you won’t be able to allocate your marketing budget effectively — you may be wasting spend on underperforming campaigns or not putting enough behind the most effective ones.
To understand the true cost per lead of your campaigns, you need to attribute each phone call to the marketing campaign, landing page, or keyword that drove it. To do this, leading OEMs and dealership networks use call tracking software like Inovca. Invoca tracks not just how many phone calls each of your campaigns drive — but if those calls resulted in conversions. You can then use this data to allocate your budget more efficiently.
The last thing you need is yet another tool in your already crowded marketing stack. It probably seems like you spend half your day hopping between different portals and dashboards. Don’t worry — Invoca lets you integrate call tracking data with the martech tools and workflows you use every day.
Two of the most common platforms our customer integrate with Invoca are Google Ads and Search Ads 360. When you combine Invoca with these platforms, you can use phone call conversion data to optimize your bidding strategy. This gives you a more complete data set and allows you to bid on the campaigns driving the most valuable conversions — whether those came in online or over the phone. You can also use Invoca’s call tracking data to inform Google Ads’ smart bidding algorithm, allowing its AI to make more intelligent bids on your behalf.
Invoca’s integrations can help you significantly lower your cost per lead on your search marketing campaigns — and scale your results. Check out our full integration library here.
You can dramatically decrease your cost per lead with a strong retargeting strategy. Retargeting is one of the most efficient ad buys you can make — it’s far easier to turn someone who has already engaged with you into a lead, as opposed to someone who has never heard of you. But for your retargeting strategy to work, you need to personalize every ad to meet your prospects’ interests.
First-party data is critical for fueling personalization. The more first-party data you have at your disposal, the better you can tailor consumer experiences based on past interactions with your brand. But you may be overlooking one of the richest sources of first-party data — phone conversations. In these interactions, consumers are literally telling you exactly what they want and how to make them happy. With a conversation intelligence solution like Invoca, you can capture these insights at scale and integrate them with tools like Salesforce and Adobe Experience Cloud to enhance personalization.
Once you have conversation intelligence data at your fingertips, you can use the content of phone conversations to personalize all digital touchpoints. For example, if the caller expressed interest in the Toyota Tacoma over the phone but didn’t schedule a test drive, you could retarget them with ads showcasing the Toyota Tacoma. You could even tailor the messaging of the ads to emphasize the specific value props they mentioned — for example, the towing capacity. When they revisit your website, you could also feature the Toyota Tacoma in the hero image — and, if you really wanted to sweeten the deal, you could add a special financing offer.
In the past, if someone clicked your ad and scheduled a test drive via phone, you wouldn’t have access to this information about their journey. You would assume they didn’t convert and continue to target them with ads, irritating them and wasting your budget. With Invoca, you can suppress callers who converted over the phone from seeing future ads. This reduces wasted ad spend and creates a better experience for customers.
This kind of personalized retargeting is far more likely to convert leads than a one-size-fits-all message. When you use this approach at scale, you can better reengage the people who already know your business, improve ad suppression, and significantly increase your conversion rate.
With over 300 locations, AutoNation is America’s largest and most admired auto retailer. In an average year, they sell over 500,000 new and pre-owned vehicles and service nearly five million customers. Its mission is to deliver the most customer-focused sales and service environment in automotive retail. AutoNation uses Invoca to track phone call conversions and create seamless digital-to-call experiences.
With Invoca, AutoNation has full attribution for the web pages, digital marketing campaigns, and search keywords that drive high-quality phone leads. With this data, they can allocate more budget to their top-performing campaigns and eliminate campaigns that are primarily driving support calls and non- sales-related inquiries.
AutoNation passes Invoca’s call attribution data into their martech stack, including Google Ads, Search Ads 360, Google Analytics, and Facebook. This allows them to manage their bids and CPCs based on both online and phone call conversions, ensuring they’re getting the most out of their campaign budgets.
“Our biggest problem was that our phone calls were going into a data black hole,” said Anand Rao, SVP of Digital Business at AutoNation. “We couldn’t tie a sale back to the campaign that drove it and that made it difficult for us to optimize our media spend. Invoca has given us complete visibility into the campaigns driving each call as well as what happens on those calls. It’s enabled us to get a higher return on our ad dollars and prove our full ROI.”
Invoca helps AutoNation send buyers personalized marketing campaigns touting the type of features they mentioned over the phone. AutoNation also gives its sales agents access to those insights, so they can tailor the conversation to win the sale. This creates a seamless omnichannel experience that makes every customer feel acknowledged and valued.
“The car buyer journey is different for everyone — some people want safety features and others want performance. Invoca has helped us tap into phone conversations so we can understand each buyer’s unique needs,” said Marc Cannon, Executive Vice President and Chief Customer Experience Officer at AutoNation. “As a result, we can deliver a truly peerless car buying experience.”
Invoca’s conversation intelligence platform helped AutoNation not only survive the pandemic, but truly thrive. AutoNation had its best quarter in company history in Q2 of 2021, and the company is poised for future growth as it continues to open new locations and increase its used car inventory.
Want to learn how Invoca can help your dealership drive more revenue? Check out these resources: